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Maxim Has Already Lost Biglari Holdings $39 Million

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Maxim magazine, which was purchased by Biglari Holdings in early 2014, has already lost the holding company an aggregate pre-tax sum of $39 million, according to a Feb. 18 letter to shareholders from CEO Sardar Biglari.

Maxim lost $21.5 million in 2014 and $18.1 million in 2015, according to the letter. Overall, the after-tax impact of the magazine has been a loss of $25 million.

"We purchased a media business, Maxim -- knowingly stepping into a maelstrom -- with the
expectation of incurring substantial short-term losses, the bulk of which we view as investments," Mr. Biglari wrote. "The purchase of a troubled company with a core business, print publishing, in an industry with deteriorating economics is not for the faint of heart. If the tides are too tough, the abilities of the
swimmer become irrelevant."

Still, he stuck by his promise -- made a year earlier to shareholders -- that Maxim would become profitable in 2016 ("late 2016," he clarified in the most recent letter).

He appraised the magazine's progress positively. "We have vastly improved the quality of the Maxim brand, which has resulted in our appealing to a more affluent audience. Maxim as a men's luxury lifestyle brand is resonating," he wrote.

In December, Maxim's single-copy sales totaled 101,805 copies, topping any single-month performance last year among GQ, Esquire and Men's Journal, according to Maxim, citing Alliance for Audited Media figures.

But the men's magazine has been beset by high-level turnover. Editor Kate Lanphear left last fall, and Publisher Kevin Martinez left at the end of January.

Mr. Biglari, 38, took over for Ms. Lanphear as editor in chief, though his new role was never publicly announced; it was finally reflected on the masthead of the magazine's February issue.

Glenn O'Brien was brought on in November as editor at large, though it was reported at the time that he would serve as Maxim's "top editor." (A spokesman said that characterization was inaccurate.)

In addition to Maxim, Biglari Holdings owns two restaurant chains -- Steak 'n Shake and Western Sizzlin' -- and First Guard Insurance Co. Mr. Biglari is known for his bravado, and the company he controls, he said in the letter to shareholders, "represents an oasis of unconventionality."